Construction Sector In Deep Recession In Hungary

  • 22 May 2012 9:00 AM
Construction Sector In Deep Recession In Hungary
The downturn in the construction industry continued as output in March contracted 12.6% year-on-year, the Central Statistics Office KSH announced. Compared to February output was up by 0.1%. In the first three months, the sector's performance shrank by an annualised 11.6%, according to the KSH data.

Construction of buildings fell 26.4% year-on-year while construction of other facilities rose 12.4%. The increase is explained by the weak base figure of 2011, Napi Gazdasag wrote, adding that new orders do not look promising. The volume of new orders signed was down 1.3% year-on-year, while volume of total orders declined 16.8%.

Prices in the sector rose an annual 2.1%, below the rate of inflation, according to the KSH figure.

The new public procurement law has not addressed the problem of companies winning tenders at unrealistically low prices, said Laszlo Weber from the construction industry association Evosz. The lack of demand from the state is the biggest problem facing the sector, said Gyorgy Szeman, chairman of the Hungarian Building Material Association.

In terms of legal actions against companies, the construction industry remains one of the riskiest areas in the economy, according to credit insurer Coface. One out of seven companies operating in the sector has come under liquidation procedure. Coface expects company wind-ups to rise this year generally and specifically for the construction industry.

Source: Hungary Around the Clock

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